It's a hard sell
The ad industry may be small, but it's beginning to grow as companies
learn
to push their products
HO CHI MINH CITY - A quirky new TV commercial has been turning heads
lately
in Vietnam. The 20-second spot begins with a disembodied hand roaming
over a
row of unlabelled plastic bottles and jars. The hand picks up one bottle
then quickly puts it down, as the soundtrack emits a small sigh. A
message
flashes across the screen: "Without advertising, how will the customer
know?" Zoom in on the green apricot logo for Mai Thanh, a Vietnamese
advertising firm based in Ho Chi Minh City.
The ad speaks volumes about the need to educate Vietnamese companies on
the
importance of promoting themselves. In this nascent market, where print
and
TV ad expenditures were merely $121 million last year, foreign and
joint-venture companies dominate, while local firms supply only 10% of
the
ads. "It takes 10 times longer to convince a local client. They don't
see
the need to build a brand," says Mai Thanh's managing director, Tran Thi
Thanh Mai.
Mai's need to advertise for herself--and her entire industry--isn't
surprising given Vietnam's belated transition to a market economy. Most
state-owned firms have minimal experience with advertising, while many
private firms remain small start-ups. One local agency reckons that only
200
out of a total of 80,000 Vietnamese companies have ad budgets.
Still, some foreign ad agencies view Vietnam as a promising market. They
point to an emerging consumer class, the country's relatively strong GDP
growth, which the World Bank estimates is at about 5%, and the 30%
increase
in ad spending annually over the past two years as good signs. These
days,
the 20 foreign ad firms in Vietnam are staffing up with both expatriates
and
locals to meet the demands of multinational clients active across the
region, while also aiming to get new business from local joint ventures.
Local competition
Hovering in the wings are the 15 full-service Vietnamese agencies like
Mai's. A slew of self-described "advertising" companies have also
cropped
up, thanks to a recent law that vastly simplified procedures for
starting
new businesses. Even if most of these 700 Vietnamese companies are doing
no
more than painting billboards, conducting door-to-door promotions or
designing layouts, they are eager to acquire more sophisticated tools of
the
trade. "They think it's easy to make money," notes one analyst.
There are also signs that some local businesses are discovering the
benefits
of promoting consumer awareness. In the first six months of this year,
95
out of the 118 companies running ad campaigns for the first time on
Vietnamese TV were local companies, according to market-research firm
Taylor
Nelson Sofres Vietnam.
The good news hasn't erased the bad memories of the 1990s, when the
industry
suffered a rough ride. Anxious to protect local culture, the government
ripped down English-language billboards and imposed strict censorship.
Today, English ads remain taboo. But Vietnam's advertising industry is
looking towards new business opportunities as the nation moves to
integrate
with the global economy.
Protectionist policies toward local ad firms are being phased out. The
system began changing in June, when J. Walter Thompson Vietnam--the
country's first 100% foreign-owned ad agency--won a licence to handle
media
buying directly. Vietnam initially sought to protect local agencies by
preventing foreign agencies from buying space in media outlets. In other
words, the foreign agency could help the client dream up the concept and
produce the ad, but it needed to hire a local firm to buy space in
newspapers and air time. That's now changed. "When you book through
another
local company, you waste time and money," explains Chu Thi Hong Anh,
president of J. Walter Thompson Vietnam.
The Vietnam Advertising Association expresses confidence that the
Vietnamese
agencies will eventually triumph. Tran Trong Uyen, deputy director of
the
Youth Advertising Company, draws inspiration from the recent soccer
World
Cup: "The Korean team beat the Italians, so we believe we can do it."
By Margot Cohen - The Far Eastern Economic Review - July 18, 2002.
|